The increase in spending that occurs because the real value of money increases when the price level falls is known as the
A) interest rate effect.
B) international trade effect.
C) price effect.
D) wealth effect.

Question

Quizplus · Accepted Answer

The increase in spending due to the real value of money increasing when the price level falls is known as the wealth effect. Individuals feel wealthier as their money can purchase more goods and services, leading to increased spending.

The Increase in Spending That Occurs Because the Real Value